Quoted from robm:Really? I would have thought most rich people who are smart would pay cash for cars (and ensure they are affordable), so there are no interest costs buried in the lease payments? Then they could utilise the otherwise dead end interest payments to invest in appreciating assets? I would have thought its a lot easier to pick a stock/real estate appreciating asset thatn one that is a car?
Quoted from Lermods:I don’t see any advantage to leasing if your goal is to retire early.
Take a 2022 Honda Pilot lease, $4300 down, $499/month payment, 36 months. Comes to about $618/month over life of the lease.
You can buy that same pilot for $42000 if you pay msrp. If you keep it 10 years, it costs you about 350/month (42000/120) AND the car has residual value, perhaps a quarter to a third of the purchase price you can recoup if you want to sell it. There will be some maintenance/repair, but you are saving $270/month (618-350), which is over $30k during that 10 year period. Pilots are pretty reliable so maintenance/repair should be pretty reasonable (you can buy an extended warranty from Honda out to 8 years/120k miles for about $1000 if repairs scare you). If you finance the vehicle, the numbers will go up in the first three years of the loan to account for interest (assuming 36 month loan), but still much lower than a lease.
Leasing only is desirable if you want that new car every three years, which is not consistent with many of the approaches discussed in this thread and does not put you closer to retirement relative to buying.
I was essentially responding to the types mentioned by PinJim with respect to luxury cars. The honda scenario makes total sense as those cars are reliable and have very good resale value.
My brother and his wife have been in the car industry many years working for luxury dealerships and in these places, people rarely buy the cars new and all in cash. Most prefer to lease/drive them a few years, dump them and get into another lease rather than take a hit up front and again on the massive depreciation. Of course this is a tactic for when you already have enough money to cover that kind of cost and want to drive a certain level of vehicle.
